q1 2013 cross sector report final

United States . Spring 2013

Cross Sector Outlook

Real estate markets remain slow and steady overall, but both leasing and investment demand are beginning to broaden. The housing recovery is enabling more geographic markets to participate in varying levels of growth, and activity is finally reaching out the quality and risk spectrum, as tenants search for quality space and talent and investors seek higher yields.

As the cyclical recovery swings between acceleration and deceleration, unique structural transitions are at work, such as the densification of office space use and e-commerce shifting tenant needs in both distribution and retail.

We expect positive rental growth across all property types this year as demand diversifies, development pipelines stay in relative check and the retail market finally bottoms. The maturing multifamily cycle will again lead rent growth in 2013, while office, industrial and hotel rents accelerate modestly.

Slow and steady shall win the race

2 Jones Lang LaSalle • United States Cross Sector Outlook • Q1 2013

As we entered 2013, we were faced with lingering debt ceiling issues and other budgetary policy

measures that were unresolved. However, things turned out better than expected and so far strength

in real estate investment activity continues to be driven by employment growth sectors of technology,

energy and healthcare, as well as an improving housing recovery. Inflation appears to be contained

and still-low long-term treasury yields are in play to support attractive financing options. The availability of tradable product that continues to satisfy investor appetite for risk is also a positive

factor. While not completely out of the woods in the near term, we share our views and insights in the

pages to follow on what potentially lies ahead and will be the drivers for sustainable growth for the

remainder of 2013 and beyond across core property sectors, be it in traditional primary or growing

secondary markets.

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Table of contents

Cross property comparison 5

Multifamily Real Estate Sector 6

United States Multifamily Clock 8

Office Real Estate Sector 9

United States Office Clock 11

United States CBD office clock 12

United States Suburban office clock 12

Industrial Real Estate Sector 13

United States Industrial Clock 14

Retail Real Estate Sector 15

United States Retail Clock 16

Hotel Real Estate Sector 17

United States Hotel Clock 19

Appendix 21

National Class A cap rate maps 22

Sector statistics Multifamily 23

Sector statistics Office 24

Sector statistics Industrial 25

Sector statistics Retail 26

Sector statistics Hotel 27

Sentiment gauge Multifamily 28

Sentiment gauge Office 29

Sentiment gauge Industrial 30

Sentiment gauge Retail 31

Sentiment gauge Hotel 32

Key transactions Multifamily 33

Key transactions Office 34

Key transactions Industrial 35

Key transactions Retail 36

Key transactions Hotel 37

Capital market trends and fundamentals at a glance 38


Cross property comparison

fundamentals, driven partly by continued strength in technology and energy hub markets. Although construction is rising modestly in some markets, rents are increasing slowly, while concessions are firmly headed on a downward trajectory. Overall, we expect trends to continue to drive more landlord-favorable markets.

Demand for modern, functionally superior space continues in the industrial sector and vacancy is sitting at post-recession lows. We expect demand to broaden as more mid-sized tenants come back into the market.

The hotel sector continues to benefit from overall strong operating fundamentals, which underpins a buoyant transactions market so far this year. A number of hotel markets are already on a multiyear run of double-digit RevPAR increases.

Multifamily remains separate from the slow recovery pack and is in the early peaking phase overall. While the anticipated spike in transaction volume is playing out, particularly as “would be” homeowners remain on the sidelines, expect compounding occupancy and rent growth to begin to slow a few years out.

Reading the clock The Jones Lang LaSalle U.S. property clock demonstrates where each product type sits within the real estate cycle. Property sectors, mainly driven by their fundamentals, generally move clockwise around the clock. Property types on the left side of the clock are largely in growth mode, whereas any on the right demonstrate weakness.

So far for 2013, construction remains relatively close to a 40-year low across most core property sectors outside of multifamily, with limited new development on the horizon. This lack of new construction and some accelerated obsolescence in older properties will support the occupancy and rent growth we expect, particularly in quality properties, even with only slow underlying growth. Overall leasing activity appears stable and vacancy continues to decline across most markets. Investment activity continues to increase so far as the year progresses.

For the retail sector, expect new construction to remain low for the next few years, as emphasis is placed on redevelopment. Population growth remains key to performance in 2013 and beyond.

Investment trends in the office sector are following improving

Q1 2013: United States property clock

Peaking market Falling market

Rising market Bottoming market

Multifamily

Retail

Hotel

Industrial Office

Multifamily Real Estate Sector

Market performance drivers

Metros with a solid base of 21st century industries (such as high-tech, energy and bio-tech) were our top performers in recent months as diverse employment opportunities and the resulting population in-migrations have supported increased rental demand. This is evidenced by the double digit rent growth that has occurred in San Francisco, San Jose and Denver as well as the rapid pace of absorption that has occurred in the three major Texas metros (Dallas, Houston and Austin). Despite the depth of new deliveries in these markets in 2012, and a heavy pipeline in 2013, over 1.0 percent of the inventory was absorbed (on a net basis) with year-over-year rent growth well above the national average.

Following our “21st Century Markets,” were our metros that we classify as “rebounders.” These are metros with economies that were heavily reliant on housing and tourism prior to the downturn and, generally

Multifamily outlook The presidential election, “fiscal cliff” threat, sequestration and rising gasoline prices were some key challenges of the last 12 months that have kept uncertainty on the forefront and effectively stalled the anticipated rate of economic growth across the nation. The for-sale housing market is a bright spot, as it is beginning to turn a corner and helping to stabilize economies within some of the hardest hit U.S. housing markets. This is in turn easing pent-up housing demand and allowing for household formation to resume. While low interest rates and loosening lending requirements are doing their part in spurring home buying activity, this general uncertainty continues to sideline many “would be” home buyers across the nation. As of the first quarter of 2013, much of the reported home sales continued to be driven by investors and second home purchasers rather than end users. The national rate of homeownership remains at a 10-year low with 34.6 percent of households opting to rent.

These factors have continued to fuel robust demand for rental apartments in recent months, causing multifamily occupancy and rents to climb well above their 10-year averages. Nationwide, strong performance in terms of unit absorption and rent growth continued across all major U.S. metros over the last 12 months. While the rapid pace of absorption showed signs of a slowing toward the year-end, conditions for renters continued to tighten as occupancy climbed 40 basis points over the last 12 months. Rents followed suit, continuing their upward trajectory and increased 4.4 percent year-over-year to new historic heights.

It is our view that, despite the threat of the swelling construction pipeline, rebounding job growth and increased demand from an expanding renter population will continue to support healthy absorption levels over the long term. While short-term setbacks may occur, particularly in “overbuilt” submarkets, apartment fundamentals will remain strong into 2017.

Top 3 leasing market drivers

Driver Comments

Diverse employment opportunitiesResultant increase in population migration supports increase in rental demand.

Expanding renter population Bodes well for absorption of inventory on a net basis.

Housing and tourism Aids in the recovery that has occurred in “rebounder” metros.

Top 3 investment market drivers

Driver Comments

Favorable debt markets Funding by GSEs continues to propel multifamily investment activity.

Strong long-term fundamentalsHigh occupancy and growing rents keep product type highly desirable to investors.

Increasing job growthTechnology, energy and other growing employment sectors drive overall fundamentals in key markets.


rate compression; sub 4.0 percent cap rates are widely reported for core product in gateway cities. Because of these compressing yields, there has been much talk by domestic investors of currently pursuing secondary assets in secondary or tertiary markets and submarkets.

Over the last 12 months apartment operators, in typical fashion, have dominated acquisition activity with $40.3 billion in purchases followed by REITs with $29.4 billion, and investment managers, eager to outperform the NCREIF Index, have purchased $9.0 billion in multifamily assets.

Since 2012, uncertainty overseas has driven demand for U.S. multifamily product back to prerecessionary levels. Canadians, who have historically been active buyers, led international acquisition activity over the last 15 months and closed $3.2 billion in U.S. multifamily transactions. Switzerland has been the second most active with $698 million in purchases followed by Israel ($407M), the United Kingdom ($291M) and Kuwait ($272M). This international capital has found its way to nearly all major metros with Dallas, Houston, Manhattan, Chicago and South Florida each seeing over $300 million in international acquisitions since the start of 2012.

Flow of capital While the apartment sector’s strong performance was a primary driver behind investor demand, the availability of attractive debt relative to other property sectors was a large differentiator in 2012. This fact is largely supported and fueled by the GSEs; who generally exceed other capital sources in terms of overall proceeds and are estimated to account for approximately 65.0 percent of all 2012 originations.

In recent months, Freddie Mac was reportedly lending up to an 80.0 percent loan-to-value ratio (based on the purchase price) for Class A assets in primary locations and a loan-to-value ratio of up to 75.0 percent for secondary assets and locations. During the first half of 2012 it was reported that, in some instances, borrowers successfully executed 10-year fixed rate loans, with generous interest-only periods, while capturing interest rates below 4.0 percent. However, in recent months, the opportunity to capture interest-only periods diminished but interest rates remained competitive.

Along with Fannie Mae and Freddie Mac, life insurance companies and balance sheet lenders are offering very attractive financing relative to historical standards. However, like the agencies, their ability to out-quote other financing sources in terms of proceeds and rates hinges on their favorable evaluation of both an asset and a borrower. Both segments were more active in over the last 12 months than the previous three

speaking, are now benefiting from the recovery occurring within those sectors. Our “rebounders” are primarily located in the Sunbelt and include Atlanta, Las Vegas, Phoenix and Los Angeles as well as Florida and Southern California. These metros have experienced year-over-year occupancy increases between 60 and 90 basis points and, in many cases, rent growth above the national average.

Multifamily transaction volumes

Favorable debt and strong long-term fundamentals continued to propel multifamily investment demand to peak levels. In 2012, needle moving portfolio sales, large ownership entity transfers and an insatiable appetite from apartment operators drove sales velocity to 2005 levels. Over $80 billion in transactions closed and apartment building sales outpaced office building sales for the first time in recorded history.

These trends have continued into 2013, particularly the needle moving portfolio sales. The most notable being the Equity Residential and Avalon Bay’s joint venture to purchase the entire Archstone portfolio. As of the close of the first quarter in 2013, sales velocity was on pace with 2012 as multifamily sales volumes reached $30 billion. Based on the capital reportedly circling multifamily, volumes in 2013 are expected to reach record levels.

Buyer characteristics & what investors look for As of the close of the first quarter, sales volumes over the last 12 months neared $100 billion, which is a record level. Domestic and international buyers have been flocking to core assets, often with expectations of a minimal yield in exchange for the safety of a quality asset in a prime location. The highly competitive acquisition landscape, coupled with the downward pressure on treasuries, continues to support cap

Transaction volumes by market for 2012 relative to 2011: Gateway markets finished strong, as well as secondary markets with rising appeal, particularly Austin and San Jose; strength continues through Q1 2013

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$16B apartment portfolio deal closed February 2013 is reflected primarily across Los Angeles, DC and Manhattan gateway markets Source: Jones Lang LaSalle Research, Real Capital Analytics *Q1 2013 data as of early April 2013


years and were reported to have been as, or more, competitive than agencies when financing the higher quality or lower leverage deals.

During the first quarter of 2013, the looming uncertainty over the GSE’s future was put into light. Agency lending for multifamily assets hit a historical high in the fourth quarter of 2012 which likely propelled Congress to take action. In an initial effort to reduce the size of the agencies, and have the private sector play a larger role in bearing credit risk, an annual lending cap of 90.0 percent of 2012’s multifamily loan volumes was put into place moving forward. While an impact is likely, a 10.0 percent cap on 2012’s high GSE origination volumes will not likely derail the expectations that 2013 will be a historically strong year for multifamily investment.



Charlotte, Dallas, Houston, Los Angeles, Nashville, Richmond, San Diego

Boston, New York, San Francisco

Baltimore, Chicago, Northern New Jersey, Philadelphia

Atlanta, Inland Empire, Orange County, Phoenix South Florida,

Austin, San Jose, Seattle, United States

Las Vegas, Orlando, Raleigh-Durham, Tampa Bay

Jacksonville, Memphis

Washington, DC

United States Multifamily ClockHousing and tourism driving growth in “rebounder” and other metros

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Office Real Estate Sector

While tech and energy markets still comprised the vast majority of occupancy growth, the diversity of the recovery have begun to change ever-so-slightly with most markets now participating in growth. In the first quarter of 2013, 70.0 percent of markets posted occupancy growth with numerous tenant industries from retail in St. Louis to finance in Orange County to insurance in Chicago to consulting in Sacramento demonstrating tenant growth. That diversity is also present in future growth expectations as tenant requirements increased from Boston to Stamford down to Miami and across to Minneapolis, Dallas and Portland, signaling tenants posturing on future economic conditions shifting from a neutral or pessimistic view to one that is more optimistic.

Despite the diversity we have recently witnessed in tour activity, leasing volume and expansion, tech and energy continue to dominate the story of growth. In the first quarter of 2013, Seattle handily led absorption gains with 1.6 million square feet of absorption driven by firms like Google, Intel, Cisco and Visa, among others. Meanwhile, Northern California, the epicenter of tech, saw net absorption of more than 1.5 million square feet. However, even in that region, we even saw diversity. Two of the sleepier Northern California market in recent years, the East Bay and Sacramento, came to life with headquarter relocations and healthcare expansions driving growth in those market segments. On the energy side, Houston continued to be king, driving significant economic, employment and thus office occupancy gains. In Houston, the region has created 118,200 new jobs, a 4.5 percent annual increase, in the

Office outlook The office sector kicked off 2013 in a much different way than a year ago. The anemic performance of the first quarter 12 months ago provided a preview of how 2012 ended up: tenant indecision, depressed leasing volumes, growth concentrated in just a few markets and, largely, in quality space and an overall performance that took several steps back from 2011. However, the first quarter performance of 2013 provided a view of a transitioning market that appears to be on far-sturdier ground than we saw 12 months ago. Tenants came back into the market in a meaningful way with respect to touring spaces and completing deals, sublease space declined dramatically in the first quarter, occupancy growth outnumbered gains from 12 months ago by more than fivefold and we saw growth in geographies and product types that have been dormant for several years. Additionally, rents, which were declining in close to 40.0 percent of markets at this point last year, are increasing slowly, but consistently, across more than 80.0 percent of markets JLL tracks, while concessions are firmly headed in the downward direction. Even construction, while focused in a handful of markets on the East and West coasts, is jumping up from near-historic lows.

All of these factors provide concrete evidence that the market is transitioning from a more neutral position in recent quarters to what will likely be a landlord-favorable environment across most submarkets and product types at this time next year.



Driver Comments

Tenant growth requirementsTenants across multiple industries have grown more optimistic on future economic conditions.

TechnologyTechnology firms have been leaders in absorption gains within the office sector.

Energy

Employment sector of energy has boosted growth in primary and second-ary markets. Expect sustainable trends in 2013 and beyond.


Driver Comments

Attractive financing options

Coupled with diversifying demand and tradable product to meet investor appetite for risk across traditional and nontraditional markets.

Energy legislation

Energy legislation should drive future momentum, and bodes well for further investment opportunities in many top markets.

Healthcare expansion Healthcare expansions to drive growth in some “sleepier” markets.


Buyer characteristics & what investors look for For the last 24 months, investors have increasingly targeted market segments and assets that have benefited from the recovery the most. On the geographic side, demand has largely been limited to tech and energy markets and the coastal gateway cities. On the quality side, investors have mainly been focused in Trophy and A-Class product within urbanized cores and, when looking at the scope of risk, the vast majority of trades demonstrate investors’ minimal appetite for vacancy or leasing risk. However, we believe the scope of where investors will look will gradually begin to change as we tread throughout 2013 and into 2014 and we see greater leasing momentum across markets.

As the number of top-quality deals remains limited and yields in core locations / markets continue to compress to near-historic lows from San Francisco to Seattle to Houston and even to more challenged demand markets like New York and Washington, DC, a subset of institutional investors will look to the next tier of markets from Denver to Minneapolis to Portland and Raleigh as solid leasing demand markets that offer higher yields. This transition could also begin to realize itself across quality to Class B assets as leasing demand is finally picking up, evident with Class B net absorption accounting for the majority of absorption in the first quarter of 2013- the first time we have seen this in the current recovery.

Flow of capital Whether investors choose to transact in a primary or secondary market, safety and stability remain favored in highly occupied properties and will likely do so for the foreseeable future. This is evidenced by the rising average 93.0 percent occupancy rate for better-quality office assets that transacted during the first quarter, which came in significantly above that for the overall national office market.

Core product in urbanized areas will continue to attract the largest buying audience especially from foreign capital sources, domestic institutions and insurance funds, which have increased their equity allocation into office of late. While more REITs and local players have begun to further explore core-plus and value-add plays, those opportunities and exploration of them remain fewer and far between based on the lagging leasing fundamentals in that type of product. We believe supply and demand fundamentals will gradually tighten for core-plus and value-add plays as we head into 2014, and thus more investors could re-direct some of their buying power to that asset class further over the next 12 to 15 months.

12 months ending January 2013, a rate that is nearly quadruple that of the rest of the country. That job growth drove additional office occupancy levels farther up once again. Houston absorbed more than 1.2 million square feet of additional space in the first quarter. Even while drilling has slowed and employment growth levels have declined, many companies continue their onward growth strategy due to the long-term potential of the energy sector here in the U.S. and the growing likelihood that Washington passes energy legislation this year and next that provides the industry with additional momentum, exploration and investment opportunities. That future legislation should also benefit Denver and Pittsburgh, two areas that have benefitted from higher levels of drilling and the expansion of traditional energy sources of natural gas and oil.

Office transaction volumes

So far in 2013, investment volume has picked up as well and begun to diversify across more markets like we have seen on the leasing side. Diversifying demand, coupled with attractive financing options and tradable product that met investor appetite for risk, helped the office market pull off its best first quarter performance since prior to the 2008 financial crisis. Estimated sales volume for office transactions nationally came in close to $18 billion during the first quarter, representing a 17.0 percent increase over the same period in 2012. Over the past five quarters, San Francisco, Seattle, Austin and Houston led activity, while traditional favored markets like New York and Washington, DC saw a slight pullback in investment activity levels as sellers retreated to the sidelines due to slower leasing levels in 2012. That trend changed slightly across the first three months of 2013 as Manhattan saw a big uptick in activity in early 2013, along with Houston and Silicon Valley and even slower-moving geographies that have gained ground of late like Atlanta and Los Angeles.

Most primary markets set solid pace thru 2012 relative to 2011; Manhattan and D.C. take most notable pause, while Austin and Seattle aggressively forge ahead; strength continues thru Q1 2013

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Source: Jones Lang LaSalle Research, Real Capital Analytics *Q1 2013 data as of early April 2013


United States Office ClockTechnology and energy driving fundamentals in top markets; expect Southeast and Southwest

markets to gain momentum

Peaking Market Falling Market

Rising Market Bottoming Market Austin, San Francisco Peninsula

Miami

Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Fairfield County, Hampton Roads, Raleigh-Durham, Sacramento, San Diego

Oakland-East Bay, San Antonio

Baltimore, Detroit, Milwaukee, New Jersey, Phoenix, St. Louis

Indianapolis, New York, Richmond

Jacksonville, Tampa, Westchester County

Atlanta, Los Angeles, Minneapolis, Orange County,

Philadelphia, Portland, United States

West Palm Beach

Houston, San Francisco, Seattle

Washington, DC

Silicon Valley

Dallas

Boston, Denver, Pittsburgh

Orlando

Fort Lauderdale


United States CBD office clock

Peaking phase Falling phase

Rising phase Bottoming phase

Chicago, Cincinnati, Cleveland, Columbus, Dallas, Los Angeles, San Antonio, White Plains CBD

San Francisco, Seattle

Charlotte, Detroit, Jacksonville, Oakland CBD, Raleigh-Durham,

Tampa

Raleigh-Durham, Sacramento, San Diego

Baltimore, Fort Lauderdale, Orlando

Stamford CBD, United States

Greenwich CBD, Indianapolis, Philadelphia, Portland, San Jose

Phoenix, St. Louis

Minneapolis, Richmond

Denver, Miami

Downtown (NYC), Milwaukee, Washington, DC

Austin

West Palm Beach

Atlanta, Midtown (NYC)

Midtown South (NYC), Pittsburgh

Houston

Boston

United States Suburban office clock


Rising phase Bottoming phase Dallas

Detroit, Miami, New Jersey, Phoenix

Atlanta, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Lehigh Valley, Hampton Roads (Southside), Philadelphia, Portland (Eastside, Vancouver), San Diego

Baltimore, Portland (Westside) Fairfield County, Hampton Roads (Peninsula), Milwaukee, Northern Delaware, Raleigh-Durham, Sacramento, St. Louis, Tampa, Westchester County

Denver, Indianapolis

Jacksonville, Northern Virginia, Southern New Jersey, Suburban MD

Oakland Suburbs, San Antonio, United States

Boston, East Bay Suburbs, Los Angeles, Orange County

Fort Lauderdale, West Palm Beach

Houston, San Francisco, Seattle

Austin

San Francisco Peninsula

Silicon Valley

Orlando

Richmond

Cambridge

Pittsburgh






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston






Tampa





Phoenix, St. Louis


Denver, Miami


Austin

West Palm Beach



Houston

Boston

Industrial Real Estate Sector

Market performance drivers Industrial outlook The U.S. industrial market has maintained its positive momentum at the start of 2013. The market absorbed about 30 million square feet of space, enough to bring the vacancy rate down by another 20 basis points.

We have continued to watch as demand for modern, functionally superior space has outpaced all other properties within the industrial market. For the past several years, the vacancy rate for newer properties (built in or after 2005) has significantly exceeded that of older properties thanks to large amounts of space delivered during the depths of the recession. As this space has been leased up over the last two years, vacancy in the newer properties has almost reached parity with that of the older set. As a result, the premium in asking rents for newer properties has widened significantly.

We see many opportunities for users to sign the most favorable deals in Class B space at the same time we see demand beginning to grow for that portion of the market. In a review of tenants in the market actively searching for space, we have found roughly the same overall level of demand as this time last year, but that demand is spread among more users. Total aggregate demand volumes remain consistent, but are now spread out between more requirements. This broadening of demand is reflective of more mid-sized tenants coming back into the market and improving local warehouse demand (versus regional and national), as well as a housing market that is back on track even in some of the most battered metros.

Overall, we see a market that is moving closer to its prerecession norms with development activity and rental rates rising slowly but steadily in all but a handful of the hottest or coolest metro markets.


Driver Comments

Shifting buying preferences

With consumers demanding next day (or faster) delivery for goods purchased online, firms are responding by moving distribution centers closer to population centers.

Retail sales

Retail sales have been growing by about 3.0 percent year-over-year. Most (if not all) of these goods will move through industrial real estate.

Trade flows

Containerized imports through U.S. ports continue to grow, creating more demand for industrial space, especially in markets like the Inland Empire.


Driver Comments

Building functionality

User needs for spaces continue to change rapidly with more space required for trailer and employee park-ing and higher clear heights becoming mandatory. This affects investors’ ability to relet the building down the road.

Tight construction financing

Most developers are opting for build-to-suit projects as construction financing for speculative projects is scarce, even in hot markets like Dallas and Houston.

California bias

With its much higher than average land values, California has continued to dominate the industrial investment market.


Quarter after quarter, Los Angeles and the Inland Empire continue to be the top destination for industrial investment dollars and the first quarter was no exception with $427 million flowing into Los Angeles and $569 million going to the more distribution heavy Inland Empire. Southern California in general has the lowest cap rates in the country with Class A properties now trading between a 4.8 and 5.8 percent band. Other top volume markets include the major logistics hubs of Dallas, Chicago, New Jersey, Atlanta and Philadelphia. These markets always attract investor attention due to their critical mass of investment grade distribution stock.

Beyond the major logistics markets which should always be on investors’ radars, Miami, Houston, Indianapolis and Phoenix are markets that are worth watching. Miami has been one of the strongest performing leasing and investment markets in the country thanks to its deep trade ties to fast growing South and Central American markets. Miami International Airport and the Port of Miami are both potent demand drivers for the surrounding industrial market. Houston is as hot as can be thanks to booming shale oil production (and looks to remain so for quite some time). And Phoenix and Indianapolis are both gaining in strength as distribution markets siphoning demand from the higher priced and more congested Los Angeles/Inland Empire and Chicago, respectively.

Industrial transaction volumes

Preliminary first quarter results show $3.7 billion worth of warehouse and manufacturing product changing hands to start the year. The 278 properties sold total 63 million square feet trading at an average price of $57 per square foot (7.4 percent cap rate). The total volume is about 5 percent higher than the first quarter of 2012 and is the best first quarter for industrial sales since the Great Recession. Investors continue to discover industrial as a sector worth exploring as cap rates are higher and bidding less competitive than other sectors such as office or retail.

Most primary markets set solid pace thru 2012 relative to 2011; Los Angeles and Chicagotake most notable pause, while Sacramento and Miami aggressively forge ahead; strengthcontinues thru Q1 2013

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2011 2012 Q1 2013*Source: Jones Lang LaSalle Research, Real Capital Analytics *Q1 2013 data as of early April 2013



Greensboro / Winston-Salem, San Diego, Detroit, Broward County / Fort Lauderdale, Los Angeles, Milwaukee, Northern New Jersey, Pittsburgh, Orlando

Las Vegas, Reno, Jacksonville

Baltimore, Cincinnati, Cleveland, Hampton Roads, Oakland / East Bay, Atlanta, Austin, Central New Jersey, Central Valley (California), Charlotte,

Kansas City, Denver, Nashville, Palm Beach, San Antonio, Tampa Bay, United States

Washington DC, Sacramento, Phoenix, Columbus, Houston, Silicon Valley / South Bay, Boston, Memphis, St. Louis, Portland

Inland Empire, Miami

Orange County (California), Dallas / Fort Worth, Chicago, Seattle, Indianapolis, Minneapolis / St. Paul, Richmond

Philadelphia

United States Industrial ClockWith limited exceptions, most markets hold steady

Retail Real Estate Sector

Retail transaction volumes

A new core of top performing markets has developed; namely, Manhattan, Boston, Washington, DC, Chicago, San Francisco, Los Angeles and Miami. Two main conditions define most of the markets to watch: either an energy sector boom or a housing recovery. Markets to watch include: Dallas, Houston, Broward, Tampa, Orlando, Charlotte, Raleigh, Minneapolis and Seattle.

Buyer characteristics & what investors look for There are two separate pools of buyers: Those going after healthy assets and those going after distressed properties. Private investors and REITs were the most active buyers in 2012, accounting for 68.7 percent of transaction volume. Institutional buyers are back in the market for 2013, particularly for grocery-anchored strips and assets in the major metro areas. Grocery-anchored strip centers, which typically perform well thanks to a strong anchor tenant, are one of the top assets that many buyers prefer. Outside of this asset, where competition is stiff, trophy malls remain the darling of investment markets. A third preference is the single-tenant retail asset, such as a major drug store or bank.

Flow of capital or funds The abundance of capital continues to keep transaction activity in the retail sector alive and well, with REITs, institutional and private equity

Retail outlook Investment sales have steadily improved in the last 12 months and will continue to advance in 2013. There is more product on the market than there has been in years, despite the fact that abundant capital has created a substantial surfeit of buyers over sellers. We believe now is a good time to invest in the retail market given the greater availability of product, the preponderance of capital and low interest rates.

Market performance drivers Top 3 leasing market drivers

Driver Comments

Population growth and housing rebound

In select markets (mainly along the Sun Belt), population growth projections and renewed and robust demand for hous-ing will boost demand for retail space.

Cross-channel focus

As the line between e-commerce and in-store shopping continues to blur, retailers and shopping center owners will need to look at logistics to optimize consumer traffic and revenue.

Emphasis on redevelopment

Retail construction will remain low for the next few years as landlords focus on backfilling vacant space. Efficient and creative redevelopment to meet the evolving needs of consumers will be critical.


Driver Comments

Lack of productEven as investment activity continues to ramp up, there is still a distinct lack of available product in the market.

Abundant capital

A surplus of capital in the market has pushed transaction volume up consid-erably and should continue to do so, as long as interest rates remain attractive.

Low interest ratesLow interest rates have enabled more investors to attain capital, thus funding increased acquisitions.

Most primary markets set solid pace thru 2012 relative to 2011; outside of non-traditional markets, Broward most aggressively forges ahead; expect continuance in 2013

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Orlan

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2011 2012 Q1 2013*

Source: Jones Lang LaSalle Research, Real Capital Analytics *Q1 2013 data as of early April 2013


buyers, as well as CMBS lenders quite active within the retail market so far this year. Over the past six months, private owners and public REITs have together accounted for the majority of transaction volume. Over that same period, foreign investors, particularly out of Canada, have also been active funders of retail assets. We expect these buying patterns to continue in 2013 and beyond.

Miami, New York City, Houston

Dallas, Fort Lauderdale

San Francisco



Chicago, Los Angeles, Washington DC

Boston, San Diego, Palm Beach, Tampa, Los Angeles, Orange County, Seattle

Atlanta, Orlando

United States Retail ClockEnergy sector boom or housing recovery define most of the markets to watch

Hotel Real Estate Sector


Hotel transaction volumes

The bulk of transactions continues to be concentrated in the nation’s large urban lodging markets. The most active deal market is Manhattan, with hotel trades topping $7 billion since 2011. San Diego, San Francisco and Washington, DC rank next in terms of overall liquidity since 2011.

Hotel outlook Hotel transaction volumes in the U.S. totaled $15.9 billion in 2011 and marked an uptick to $16.4 billion in 2012. The year 2013 is expected to see volumes totaling $17 billion. The activity thus far in 2013 is pacing in line with forecasts, and deal flow is expected to gather pace as the year progresses.

Opportunities for investors currently include prime urban assets which can be acquired for less than the cost to build, along with portfolios of limited service assets which allow buyers to gain critical mass. Another opportunity, particularly sought after by off-shore buyers, is the purchase of hotel assets unencumbered by a brand, which the buyers can convert to their brand as a vehicle to enter the market.

Risks that could curtail deal flow include the relatively constrained number of hotels on the market available for sale and any economic risks, which would make it more difficult for investors to underwrite future growth. But lodging fundamentals continue to show strong year-over-year increases.

Revenue per available room (RevPAR) marked nearly 7 percent growth in 2012, followed by 6.5 percent growth year-to-date in 2013, indicative of the rise in demand levels and average daily rates. A number of hotel markets such as San Francisco, Houston and New Orleans are on a multiyear run of double-digit RevPAR increases.

The hotel supply pipeline is showing some signs of increasing, but the pace of new hotel openings will remain well below the long-term average over the next several years. The number of available rooms is expected to rise by a tepid 0.9 percent in 2013 and 2014, respectively.

In most markets, it is still more expensive to build new hotels than buy existing properties, but certain urban areas such as New York, Washington, DC and Chicago now have a considerable amount of hotel rooms under construction, marking a shift from the downturn when the pipeline slowed dramatically.

Most primary markets set solid pace thru 2012 relative to 2011; Manhattan remains mostactive, while Houston and Miami remain strong markets to watch in 2013

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$500

$1,000

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2011 2012 Q1 2013

Source: Jones Lang LaSalle Research, Real Capital Analytics *Q1 2013 data as of early April 2013Transactions $5+ million, excludes casino sales


Driver Comments

Recovering hotel fundamentals

Strong hotel operating fundamentals, with consistent RevPAR growth, continue to motivate domestic and off-shore hotel acquirers.

Abundance of debt and equity capital

Amount of capital flowing into the sector has a significant impact on mo-mentum in the hotel transaction market. Number of active lenders seeking hotel product continues to increase due to higher yields.

Acquisitions versus developmentConstruction costs for upscale hotels are exceedingly high, which limits feasibility of a number of new projects.


domestic investors, with off-shore investments typically accounting for 5 percent of total volume. In the first quarter of 2013, however, off-shore investment as a proportion of total deal volume increased to 40 percent, driven by buyers of high-value assets from Singapore and the United Arab Emirates.

In terms of debt capital markets, hotel financing is continuing its strong run. Barring any major setbacks in the economy, hotel lending will continue to strengthen increasingly during 2013. Hotels with strong sponsorship and solid performance are well positioned to obtain competitive financing. The number of active lenders seeking hotel product has increased dramatically due to higher yields.

The resurgence in hotel lending is driven by securitized market: The volume of securitized lending increased 70 percent in 2012 and 2013 is poised to continue seeing growth. Overall, CMBS lenders have doubled their allocations to hospitality product.

Insurance companies, domestic and foreign banks and debt funds are ramping up their hotel lending programs as well. Interest rates and indices are expected to remain low, resulting in an environment where lenders are able to obtain outsized spreads and still offer compelling rates. As hotel operating performance continues to stabilize, an increasing number of assets will be eligible for financing, which will underpin transactional activity in the sector.

During 2012, Chicago advanced notably in terms of total volume, reaching third position. The most active markets for transactions in Q1 2013 are Manhattan, Phoenix/Scottsdale and Atlanta, with the latter two recording several large singular trades.

According to Jones Lang LaSalle’s Hotel Investor Sentiment Survey, targeted cap rates are currently in line with the levels recorded in late 2006, averaging 7.7 percent in the country. Transactions of prime urban assets are averaging as low as 5 to 6 percent.

In terms of deal flow in the remainder of 2013, markets to watch that are likely to see considerable transaction volumes include Manhattan, Los Angeles, Houston, Dallas and Miami.

Buyer characteristics and what investors look for The most active buyers in the U.S. in 2012 were private equity funds and real estate investment trusts (REITs). Private equity funds acquired hotel assets to the tune of $7.6 billion, or 46 percent of total volume in the country. REITs ranked next, with purchases of $4.2 billion, which represented 26 percent of all acquisitions. A similar representation is expected for 2013.

Private equity investors have a nationwide focus, and target both single-asset acquisitions and large portfolios. Private equity groups’ trend of acquiring portfolios of limited service hotels intensified in 2012 with Blackstone’s buy of Motel 6 hotels for $1.9 billion and Centerbridge Partners, L.P.’s purchase of the Homestead Studio Suites.

Private equity investors are expected to continue to target sizeable portfolios of limited service hotel real estate and are also bidding on acquisition opportunities where they can acquire the brand and management company.

REITs’ buyer share declined in 2012 compared to their multiyear high in 2011 due to lower share prices. Nonetheless, hotel REITs were the second most active buyer group during the year, and continued their focus on top-15 urban and prime suburban markets. REITs have a preference for prime single-assets and small portfolios (4-5 hotels) of upper-tier assets. The investment sweet spot for REITs is branded, institutional quality assets with in-place cash flow.

Flow of capital The amount of capital flowing to the hotel real estate sector marked a significant spike during the fourth quarter of 2012 and is maintaining a robust pace. The bulk of hotel investment continues to be funded by


United States Hotel ClockRevPAR growth remains positive across the board, with lodging fundamentals still showing strong increases in most markets

RevPAR growth slowing

RevPAR falling

RevPAR rising

RevPAR decline slowing

Chicago

Washington, D.C.

Los Angeles

New York

San Francisco

Miami


Appendix


U.S. Class A multifamily cap ratesCap rates compressing to historic lows; mostly all at sub 6% level

U.S. Suburban office core product cap ratesCap rates an average 50-100 basis points higher than CBD core product

U.S. retail average cap ratesCap rates still elevated in some markets

U.S. CBD office core product cap ratesCap rates the lowest in gateway markets; near historic lows on average

U.S. Class A industrial cap ratesCap rates continue to push lower; sub 6% in most coastal markets

U.S. full-service average hotel cap ratesCap rates compressing to lows not seen since 2006

NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

South Florida 4.0 – 5.0%

Houston 4.5 - 5.75%

Dallas-Fort Worth 4.5 – 6.0%

Charlotte 4.75 – 5.5%

Atlanta 4.25 – 5.25%

Washington, DC 4.0 – 5.5%

New York 3.5 – 4.5%

Philly 5.0 – 6.0%

Pittsburgh 5.75 – 6.5%

Columbus 6.0 – 7.0%

Chicago 4.25 – 5.0%

Minneapolis 5.0 – 6.0%

San Diego 3.75 – 4.5%

Southern California 3.75 – 4.25%

Northern California 4.25 – 4.5%

Seattle-Bellevue 3.80 – 4.5%

Denver 5.0 – 6.0%

Boston 3.8 – 5.5%

Phoenix 4.25 – 5.25%

Portland 5.0 – 6.0%

Cincinnati 5.75 - 6.5%

Central Florida 4.75 – 5.5%

New Jersey 4.5 – 5.5%

Las Vegas 5.25 – 6.0%

Sub 6% cap rates are highlighted

NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

Houston 6.50 – 7.25%


New Jersey 7.0 - 7.5% Chicago

6.0 – 7.5%

Los Angeles 6.0 – 7.25%

Seattle 5.40 – 5.75%

Boston 7.0 – 8.0%

Dallas 6.0 – 7.5%

Silicon Valley 5.75 – 6.00%

Atlanta 7.50 – 8.25%

Miami 7.0 – 8.0%

Denver 7.00 – 8.00%

San Diego 6.0 – 7.0%

Philadelphia 7.50 – 8.50%


NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

South Florida 8.3%

Houston 7.0%

Dallas-Fort Worth 6.0%

Charlotte 8.0%

Atlanta 7.9%

Washington, DC 6.9%

New York 6.3%

Philly 7.5%

Pittsburgh 7.5%

Chicago 6.8%

Minneapolis 6.8%

San Diego 6.8%

Denver 6.6%

Boston 6.4%

Phoenix 7.6%

Portland 6.9%

New Jersey 6.9%

Las Vegas 9.1%

NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

Houston 6.00 – 6.50%


New York 4.00 – 5.00% Chicago

5.75 – 6.25%

Los Angeles 5.25 – 5.75%

Seattle 4.50 – 5.50%

Boston 4.75 – 5.25%

San Francisco 4.00 – 5.00%

Dallas 6.00 – 7.00%

Atlanta 6.25 – 7.25%

Miami 5.50 – 6.50%

Denver 6.00 – 7.00%

San Diego 6.00 – 7.00%

Philadelphia 7.00 – 7.50%


NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

South Florida 5.00 - 6.00%

Houston 5.75 - 6.50%

Dallas 6.00 - 6.50%

Charlotte 6.75 - 7.50%

Atlanta 6.00 - 7.00%

Baltimore/DC 5.75 - 6.50%

New Jersey 5.25 - 6.25%

Eastern PA 6.00 - 6.75%

Harrisburg 6.00 - 7.00%

Columbus 7.25 - 8.00%

Chicago 5.75 - 6.50%

Minneapolis 6.50 - 7.50%

San Diego 6.25 - 7.00%

Southern California 4.75 - 5.75%

Northern California 5.25 - 6.00%

Seattle 5.00 - 6.00%

Denver 6.75 - 7.25% Kansas City

7.00 - 7.75% Louisville 7.00 - 7.75%

Boston 6.75 - 7.75%

Memphis 7.00 - 8.00%

Nashville 7.00 - 7.75% Phoenix

6.50 - 7.00%

Portland 7.00 - 7.50%

Indianapolis 6.75 - 7.25% Cincinnati

7.00 - 7.75%

Salt Lake City 6.75 - 7.50%


St. Louis 7.25 - 8.00%

NJ

CT MA

NH

NC

VA

WA

VT

AL

AZ

AR

CA CO

FL

GA

ID

IL

IN

IA

KS KY

LA

ME

MI

MN

MS

MO

MT

NE

NV

NM

NY

ND

OH

OK

OR

PA

SC

SD

TN

TX

UT

WV

WI

WY

MD

DE

RI

Miami 7.2%

Houston 7.9%

Dallas 8.2%

Atlanta 8.5%

Washington, DC 7.1%

New York 6.4%

Philadelphia 7.7% Chicago

7.6%

San Diego 7.5%

Los Angeles 7.1%

San Francisco 6.5%

Seattle 7.4%

Denver 8.0%

Boston 7.0%

Phoenix 8.4%

Orlando 8.6%

National Class A cap rate maps

Source: Jones Lang LaSalle Research





Source: Jones Lang LaSalle’s Hotel Investor Sentiment Survey


Sector statistics Multifamily

Market

Q4 Completions

(units)

2012 Completions

(units)Total Stock

(units)

Q4 Net Absorption

(units)

2012 Net Absorption

(units)

% Absorbed

2012Q4

Occupancy

Quarterly Occupancy

Change

YOY Occupany Change

Q4 Effective

Rents

Quarterly % Rent Growth

YOY % Rent

Growth

Atlanta 1,013 1,625 392,961 2,239 4,916 0.8% 90.6% 0.3% 0.8% $677.69 -0.1% 2.4%

Austin 408 3,128 176,536 1,153 4,671 0.9% 95.9% 0.4% 0.9% $863.60 1.8% 5.4%

Baltimore 500 2,614 184,562 544 1,973 -0.3% 94.2% 0.0% -0.3% $1,224.04 0.4% 0.9%

Boston 743 2,224 345,912 480 394 -0.5% 95.8% -0.1% -0.5% $1,706.58 -0.3% 1.8%

Charlotte 463 1,493 119,557 665 1,887 0.3% 91.4% 0.2% 0.3% $599.01 0.2% 4.4%

Chicago 200 724 666,858 236 1,164 0.1% 94.5% 0.0% 0.1% $1,110.27 0.3% 3.1%

Dallas - Fort Worth 2,047 6,280 600,123 5,039 14,535 1.4% 94.5% 0.5% 1.4% $817.60 1.2% 6.1%

Houston 1,885 4,504 504,915 3,351 11,466 1.4% 89.5% 0.3% 1.4% $779.13 0.1% 6.0%

Inland Empire 180 472 153,339 661 1,500 0.7% 93.9% 0.3% 0.7% $1,076.82 0.6% 4.2%

Jacksonville 273 731 83,930 372 790 0.1% 87.6% 0.2% 0.1% $686.00 0.1% 0.4%

Las Vegas - 152 149,710 599 1,400 0.8% 93.5% 0.4% 0.8% $766.05 0.2% 0.5%

Los Angeles 1,155 1,834 1,052,673 3,125 9,483 0.7% 94.8% 0.2% 0.7% $1,677.43 0.6% 5.9%

Memphis - 279 85,653 137 637 0.4% 89.4% 0.2% 0.4% $494.19 0.7% 3.4%

Nashville 394 1,949 109,009 734 1,667 -0.3% 93.2% 0.3% -0.3% $595.93 0.1% 4.5%

New York 2,076 3,908 1,978,246 2,295 10,516 0.3% 95.3% 0.0% 0.3% $2,668.39 0.0% 5.2%

Northern New Jersey - 0 153,703 75 258 0.2% 94.9% 0.0% 0.2% $1,276.55 0.7% 2.2%

Orange County 807 1,856 222,240 788 2,609 0.3% 94.4% 0.0% 0.3% $1,635.51 0.8% 6.0%

Orlando 560 1,363 152,957 886 2,227 0.6% 92.3% 0.2% 0.6% $816.75 0.0% 2.3%

Philadelphia 161 630 328,851 379 1,229 0.2% 94.6% 0.1% 0.2% $1,172.60 0.9% 3.2%

Phoenix 1,204 1,490 276,744 1,287 3,489 0.7% 93.4% 0.1% 0.7% $875.51 0.2% 2.5%

Raleigh 970 2,624 79,140 1,045 2,592 0.0% 90.9% 0.2% 0.0% $682.27 0.1% 1.8%

Richmond 475 1,161 76,895 341 958 -0.3% 91.7% -0.1% -0.3% $775.72 -0.5% 0.5%

San Diego - 1,339 268,937 514 1,518 0.1% 94.9% 0.2% 0.1% $1,467.15 0.8% 2.3%

San Francisco 220 684 220,179 503 601 0.0% 96.6% 0.1% 0.0% $2,447.48 2.1% 12.3%

San Jose 500 1,208 137,335 632 1,741 0.4% 95.6% 0.1% 0.4% $1,944.12 1.3% 11.8%

Seattle 3,021 5,602 319,549 1,975 6,113 0.2% 95.3% -0.3% 0.2% $1,004.40 1.3% 4.9%

South Florida - 48 356,157 1,239 2,544 0.7% 94.2% 0.4% 0.7% $1,180.17 1.5% 6.0%

Tampa 282 2,013 184,621 827 3,099 0.6% 90.8% 0.3% 0.6% $793.25 0.2% 1.4%

Washington - NoVA - MD 2,171 5,843 534,208 1,911 4,690 -0.2% 93.9% 0.0% -0.2% $1,486.26 0.4% 1.8%

United States 31,435 78,665 13,143,176 46,354 134,739 0.4% 93.9% 0.1% 0.4% $1,348.76 0.4% 4.4%

Source: PPR


Market Inventory (s.f.)

Quarterly total net

absorption (s.f.)

YTD total net absorption

(s.f.)


(% of stock)"Total vacancy

(s.f.)"

Total vacancy

(%)Average asking

rent ($ p.s.f.)

Quarterly percent

change rent

Under construction /

renovation (s.f.)

Atlanta 138,420,428 541,976 541,976 0.4% 25,746,339 18.6% $20.36 0.4% 450,000

Austin 44,509,101 144,190 144,190 0.3% 5,993,834 13.5% $27.81 2.5% 0

Baltimore 68,880,741 -93,258 -93,258 -0.1% 10,454,153 15.2% $22.54 0.5% 1,018,400

Boston 162,390,961 237,182 237,182 0.1% 32,070,480 19.7% $29.41 -3.8% 5,784,000

Charlotte 45,516,257 576 576 0.0% 7,104,280 15.6% $21.34 0.7% 0

Chicago 235,143,001 318,837 318,837 0.1% 45,419,165 19.3% $27.56 0.8% 0

Cincinnati 34,872,119 46,847 46,847 0.1% 6,636,369 19.0% $19.41 0.1% 40,000

Cleveland 28,643,624 -264,310 -264,310 -0.9% 5,554,015 19.4% $19.05 0.0% 450,000

Columbus 31,001,111 -122,626 -122,626 -0.4% 5,512,333 17.8% $17.58 0.1% 341,000

Dallas 161,987,594 376,491 376,491 0.2% 34,417,361 21.2% $20.88 0.0% 630,689

Denver 113,162,950 125,205 125,205 0.1% 17,165,549 15.2% $22.39 0.6% 1,024,794

Detroit 60,329,222 -151,652 -151,652 -0.3% 16,511,932 27.4% $18.62 0.2% 0

Fairfield County 48,216,949 -103,818 -103,818 -0.2% 11,108,371 23.0% $33.84 4.5% 0

Fort Lauderdale 20,978,047 53,614 53,614 0.3% 3,870,345 18.4% $26.98 1.0% 70,000

Hampton Roads 20,184,486 -43,873 -43,873 -0.2% 3,493,138 17.3% $18.24 -0.8% 402,600

Houston 149,843,430 1,200,242 1,200,242 0.8% 24,722,456 16.5% $27.74 0.6% 4,406,242

Indianapolis 42,824,641 323,006 323,006 0.8% 5,488,898 12.8% $17.14 3.5% 80,699

Jacksonville 20,732,279 -44,578 -44,578 -0.2% 3,938,379 19.0% $17.63 0.5% 0

Los Angeles 188,978,131 -606,917 -606,917 -0.3% 33,118,910 17.5% $31.83 -0.9% 598,519

Miami 35,917,198 225,202 225,202 0.6% 6,626,098 18.4% $31.59 0.7% 80,000

Milwaukee 27,641,272 88,770 88,770 0.3% 5,651,014 20.4% $17.51 1.8% 40,080

Minneapolis 66,030,154 -123,171 -123,171 -0.2% 11,646,157 17.6% $24.25 1.3% 0

New York 444,228,244 -953,702 -953,702 -0.2% 51,169,545 11.5% $59.50 0.1% 7,391,452

New Jersey 159,471,422 1,369,534 1,369,534 0.9% 39,230,841 24.6% $24.47 3.5% 1,421,274

Oakland-East Bay 45,738,144 593,607 593,607 1.3% 6,157,697 13.5% $26.49 0.8% 0

Orange County 93,967,418 324,491 324,491 0.3% 14,762,187 15.7% $22.65 -0.7% 849,000

Orlando 28,364,031 -98,863 -98,863 -0.3% 5,675,131 20.0% $19.80 -0.2% 0

Philadelphia 144,353,033 -253,382 -253,382 -0.2% 22,694,872 15.7% $24.12 0.7% 981,616

Phoenix 74,113,923 113,216 113,216 0.2% 18,491,206 24.9% $20.20 -1.0% 208,270

Pittsburgh 50,008,939 93,923 93,923 0.2% 4,636,327 9.3% $21.39 0.0% 1,101,000

Portland 58,155,689 351,232 351,232 0.6% 6,940,995 11.9% $21.21 0.0% 235,690

Raleigh / Durham 42,203,303 256,032 256,032 0.6% 6,115,960 14.5% $19.65 -0.4% 301,000

Richmond 26,351,767 243,310 243,310 0.9% 3,532,161 13.4% $18.30 -0.7% 0

Sacramento 43,178,873 413,884 413,884 1.0% 9,256,831 21.4% $22.27 0.0% 200,000

San Antonio 24,805,282 132,432 132,432 0.5% 3,950,921 15.9% $20.04 0.3% 284,699

San Diego 77,582,164 399,594 399,594 0.5% 11,514,782 14.8% $25.80 0.9% 843,424

San Francisco 73,654,161 295,296 295,296 0.4% 8,431,506 11.4% $53.56 3.8% 3,030,673

San Francisco Peninsula 28,408,276 56,389 56,389 0.2% 4,776,793 16.8% $42.82 1.5% 85,963

Seattle 88,135,765 1,646,446 1,646,446 1.9% 11,686,931 13.3% $30.01 5.2% 324,602

Silicon Valley 59,883,945 66,781 66,781 0.1% 9,627,859 16.1% $33.79 3.6% 3,467,734

St. Louis 42,973,507 -66,938 -66,938 -0.2% 7,712,262 17.9% $19.56 -0.2% 0

Tampa Bay 34,016,531 189,171 189,171 0.6% 6,672,708 19.6% $20.99 0.3% 250,000

Washington, DC 327,157,851 47,342 47,342 0.0% 50,661,239 15.5% $35.58 0.1% 5,742,955

West Palm Beach 21,521,224 -80,181 -80,181 -0.4% 5,300,136 24.6% $26.29 -3.5% 0

Westchester County 32,295,188 212,992 212,992 0.7% 5,985,964 18.5% $26.09 1.4% 0

United States 3,766,772,376 7,480,541 7,480,541 0.2% 637,234,430 16.9% $29.02 0.8% 42,732,375

Sector statistics Office


Sector statistics Industrial

Market Total Stock (s.f.)Total Vacancy

(s.f.)Total Available

(s.f.)Total

VacancyTotal

Availability

Q1 2013 Net

Absorption

YTD 2013 Net

AbsorptionQ1 '13 Average Rent ($ p.s.f.)

Q-Q % Change

Y-Y % Change

Atlanta 500,832,847 62,482,524 86,576,355 12.5% 17.3% 2,266,293 2,266,293 $3.05 0.3% -1.0%Austin 48,278,927 3,936,298 5,436,436 8.2% 11.3% 130,470 130,470 $5.16 -1.1% -1.0%Baltimore 151,281,210 15,269,990 23,635,032 10.1% 15.6% 914,189 914,189 $4.68 0.4% 0.6%Boston 230,099,162 22,421,650 35,736,617 9.7% 15.5% 1,158,938 1,158,938 $4.93 0.8% 0.8%Broward County 61,411,301 6,021,113 9,449,581 9.8% 15.4% 269,574 269,574 $6.27 1.3% 1.0%Central New Jersey 307,524,986 27,363,205 41,264,322 8.9% 13.4% (72,847) (72,847) $4.68 3.1% 7.3%Central Valley (California) 102,785,675 12,372,487 15,795,056 12.0% 15.4% 400,730 400,730 $3.53 0.1% 1.5%Charlotte 249,424,346 30,809,008 38,045,545 12.4% 15.3% 1,316,950 1,316,950 $3.22 0.9% 2.9%Chicago 1,123,809,815 102,336,066 150,577,797 9.1% 13.4% 3,613,206 3,613,206 $4.14 0.5% 0.5%Cincinnati 246,343,210 23,166,004 24,119,953 9.4% 9.8% 1,868,223 1,868,223 $3.11 0.3% 2.0%Cleveland 396,865,418 35,672,571 51,511,939 9.0% 13.0% 1,542,441 1,542,441 $3.03 0.3% 0.3%Columbus 230,706,645 18,872,878 24,516,903 8.2% 10.6% (380,725) (380,725) $2.52 -1.9% 0.0%Dallas / Fort Worth 519,543,911 40,253,708 67,251,247 7.7% 12.9% 2,145,792 2,145,792 $3.56 0.6% -1.1%Denver 199,286,457 12,602,094 20,174,059 6.3% 10.1% 359,950 359,950 $4.80 1.3% 5.0%Detroit 420,517,155 51,441,352 71,892,278 12.2% 17.1% 2,139,211 2,139,211 $3.79 2.4% 1.9%Greensboro / Winston-Salem 217,450,623 21,203,385 28,823,409 9.8% 13.3% 926,413 926,413 $2.73 0.0% -5.2%Hampton Roads 64,088,186 5,289,826 7,566,965 8.3% 11.8% (162,472) (162,472) $4.45 0.8% 1.1%Houston 435,682,698 18,132,682 34,516,419 4.2% 7.9% 1,012,297 1,012,297 $5.04 -0.4% 2.4%Indianapolis 299,150,907 19,031,820 39,940,771 6.4% 13.4% 1,890,931 1,890,931 $4.32 13.1% 13.1%Inland Empire 421,375,273 25,855,079 38,910,742 6.1% 9.2% 4,188,803 4,188,803 $4.20 0.0% 2.9%Jacksonville 84,915,104 10,306,226 15,154,456 12.1% 17.8% 50,121 50,121 $3.58 -0.8% 3.5%Kansas City 281,558,663 16,845,018 30,108,914 6.0% 10.7% 1,672,734 1,672,734 $4.16 -1.7% -3.7%Los Angeles 644,173,330 30,425,146 48,832,576 4.7% 7.6% 1,467,461 1,467,461 $6.24 2.0% 4.0%Memphis 212,636,299 24,377,542 33,065,367 11.5% 15.6% 2,018,095 2,018,095 $2.48 2.1% 2.1%Miami-Dade 123,239,976 9,220,914 14,240,522 7.5% 11.6% 16,031 16,031 $4.65 -2.3% 2.2%Minneapolis / St. Paul 248,624,413 13,053,905 26,796,108 5.3% 10.8% 107,496 107,496 $5.34 0.4% 4.3%Nashville 178,116,403 16,739,715 23,179,305 9.4% 13.0% 720,698 720,698 $2.98 1.4% -2.6%Northern New Jersey 404,457,032 33,198,275 48,149,754 8.2% 11.9% (785,981) (785,981) $5.79 1.8% 5.7%NYC 350,777,652 29,132,155 48,071,702 8.3% 13.7% 659,031 659,031 $7.03 1.0% 6.2%Oakland / East Bay 106,914,015 9,575,694 14,381,633 9.0% 13.5% 1,117,240 1,117,240 $6.12 0.0% 14.8%Orange County (California) 226,575,779 10,832,977 15,660,912 4.8% 6.9% 163,481 163,481 $6.86 1.8% 3.6%Orlando 97,750,739 10,531,372 14,124,606 10.8% 14.4% 864,268 864,268 $4.25 -1.4% 1.2%Palm Beach 22,271,374 1,863,551 2,679,893 8.4% 12.0% 122,565 122,565 $6.48 4.0% -0.5%Philadelphia / Harrisburg 845,562,483 75,491,431 124,218,818 8.9% 14.7% (272,171) (272,171) $4.00 -0.5% 0.5%Phoenix 270,722,703 27,620,942 35,359,351 10.2% 13.1% 1,262,172 1,262,172 $5.23 0.8% 1.8%Pittsburgh 125,764,593 10,998,490 16,219,171 8.7% 12.9% 360,974 360,974 $4.97 2.7% -2.2%Portland 158,405,683 11,248,135 17,237,207 7.1% 10.9% 11,841 11,841 $5.57 -1.2% 0.9%Richmond 77,433,827 7,137,098 11,087,302 9.2% 14.3% 747,323 747,323 $3.20 0.9% -3.0%Sacramento 142,579,298 18,996,547 22,872,094 13.3% 16.0% 210,901 210,901 $4.42 -1.3% 3.5%San Antonio 82,986,058 4,850,685 7,948,804 5.8% 9.6% 191,010 191,010 $4.32 -0.2% 3.3%San Diego 140,424,625 10,473,463 15,139,231 7.5% 10.8% (48,357) (48,357) $8.04 0.0% 1.5%San Francisco Peninsula 38,380,657 3,212,810 3,785,705 8.4% 9.9% (237,809) (237,809) $9.28 2.0% 2.5%Seattle 253,791,754 14,546,998 24,314,012 5.7% 9.6% 911,366 911,366 $7.08 3.2% 22.9%Silicon Valley / South Bay 49,628,667 3,516,463 5,375,757 7.1% 10.8% (7,209) (7,209) $7.09 -0.6% 5.2%St. Louis 220,829,798 16,035,456 29,557,785 7.3% 13.4% 99,878 99,878 $3.48 -0.6% -0.9%Tampa Bay 179,171,500 19,542,394 28,032,090 10.9% 15.6% 344,386 344,386 $4.21 1.9% 1.9%Washington, DC 93,951,045 10,012,542 12,746,782 10.7% 13.6% 24,839 24,839 $7.28 0.3% 0.3%United States 11,888,102,222 1,004,319,684 1,504,081,283 8.4% 12.7% 37,320,751 37,320,751 $4.39 1.0% 3.1%


Sector statistics Retail

Market Inventory (s.f.)

Quarterly total net

absorption (s.f.)"


(s.f.)


(% of stock)Total vacancy

(s.f.)

Total vacancy

(%)Average asking

rent ($ p.s.f.)Previous Qtr asking rent

Quarterly percent change rent

Under construction / renovation (s.f.)

Atlanta 360,223,676 312,310 312,310 0.1% 34,545,027 9.6% $13.00 $12.88 0.9% 1,104,979

Austin 82,978,626 161,363 161,363 0.2% 4,291,568 5.2% $18.24 $18.31 -0.4% 385,673

Baltimore 138,457,976 294,283 294,283 0.2% 7,131,783 5.2% $18.63 $18.04 3.3% 51,237

Boston 318,804,648 342,086 342,086 0.1% 13,732,592 4.3% $15.81 $15.61 1.3% 1,456,491

Charlotte 155,870,272 85,588 85,588 0.1% 11,878,150 7.6% $13.30 $13.38 -0.6% 403,435

Chicago 511,650,373 1,166,895 1,166,895 0.2% 41,701,870 8.2% $15.78 $15.62 1.0% 1,426,762

Cincinnati 123,994,337 210,505 210,505 0.2% 10,328,379 8.3% $9.88 $9.74 1.4% 232,288

Cleveland 206,989,251 238,159 238,159 0.1% 16,495,122 8.0% $10.36 $10.48 -1.1% 144,442

Dallas 384,223,460 965,287 965,287 0.3% 30,682,878 8.0% $13.48 $13.46 0.1% 3,476,359

Denver 191,850,531 788,309 788,309 0.4% 12,554,419 6.5% $14.65 $14.43 1.5% 921,219

Detroit 243,053,461 385,103 385,103 0.2% 23,458,159 9.7% $11.91 $11.95 -0.3% 845,193

Fairfield County 46,665,829 6,983 6,983 0.0% 2,263,111 4.8% $25.60 $25.27 1.3% 356,590

Fort Lauderdale 106,947,269 295,143 295,143 0.3% 7,183,377 6.7% $17.67 $17.54 0.7% 353,558

Hampton Roads 102,352,184 258,065 258,065 0.3% 6,790,882 6.6% $13.42 $13.19 1.7% 263,293

Houston 343,046,446 571,863 571,863 0.2% 22,331,600 6.5% $14.31 $14.15 1.1% 669,856

Indianapolis 119,194,484 36,047 36,047 0.0% 848,518 7.1% $12.06 $11.83 1.9% 127,032

Jacksonville 94,763,738 302,792 302,792 0.3% 7,038,470 7.4% $12.68 $12.69 -0.1% 110,602

Los Angeles 466,975,860 -61,882 -61,882 0.0% 24,513,960 5.2% $24.39 $23.99 1.7% 640,497

Miami 126,902,827 169,459 169,459 0.1% 4,935,329 3.9% $28.73 $28.80 -0.2% 832,993

Minneapolis 203,817,428 243,114 243,114 0.1% 10,020,344 4.9% $13.15 $13.20 -0.4% 307,005

New York 62,473,455 -32,092 -32,092 -0.1% 1,362,317 2.2% $50.90 $50.88 0.0% 650,309

New Jersey (Northern) 352,044,812 688,583 688,583 0.2% 23,354,215 6.6% $19.37 $19.28 0.5% 2,000,565

Oakland-East Bay 132,190,032 281,276 281,276 0.2% 6,311,413 4.8% $20.76 $20.98 -1.0% 141,840

Orange County 139,148,590 60,023 60,023 0.0% 7,701,680 5.5% $22.23 $22.33 -0.4% 264,458

Orlando 165,392,783 293,673 293,673 0.2% 12,075,099 7.3% $14.28 $14.39 -0.8% 111,973

Philadelphia 495,535,183 40,514 40,514 0.0% 31,225,572 6.3% $13.85 $13.84 0.1% 744,100

Phoenix 217,860,510 484,603 484,603 0.2% 24,002,915 11.0% $14.29 $14.34 -0.3% 502,733

Pittsburgh 138,980,234 835,013 835,013 0.6% 5,725,405 4.1% $11.47 $11.47 0.0% 136,446

Portland 108,771,455 142,713 142,713 0.1% 5,899,867 5.4% $15.99 $15.83 1.0% 340,566

Raleigh / Durham 95,386,894 407,170 407,170 0.4% 5,831,703 6.1% $13.91 $13.83 0.6% 178,260

Richmond 80,451,376 34,324 34,324 0.0% 5,702,532 7.1% $13.60 $13.49 0.8% 54,911

Sacramento 119,776,638 237,213 237,213 0.2% 11,226,742 9.4% $15.74 $16.08 -2.1% 27,591

San Antonio 126,805,278 657,306 657,306 0.5% 6,959,512 5.5% $13.90 $14.09 -1.3% 687,163

San Diego 135,075,601 242,740 242,740 0.2% 6,247,834 4.6% $21.15 $20.97 0.9% 209,742

San Francisco 86,082,312 51,176 51,176 0.1% 2,333,131 2.7% $29.05 $28.64 1.4% 60,400

Seattle 181115391 261344 261,344 0.1% 9,242,880 5.1% $17.28 $17.42 -0.8% 608,687

St. Louis 159,844,699 148,985 148,985 0.1% 12,969,147 8.1% $11.92 $12.02 -0.8% 729,800

Tampa Bay 219,590,216 -134,479 -134,479 -0.1% 15,445,255 7.0% $13.74 $13.61 1.0% 246,172

Washington, DC 219,987,621 84,376 84,376 0.0% 10,647,382 4.8% $23.27 $23.15 0.5% 1,820,809

West Palm Beach 77,307,490 594,312 594,312 0.8% 5,385,710 7.0% $17.66 $17.45 1.2% 60,068

Westchester County 49,330,248 7,359 7,359 0.0% 2,831,339 5.7% $26.82 $26.68 0.5% 12,000

United States 12,487,391,626 19,904,480 0.3% 862,414,196 6.9% $14.51


Sector statistics Hotel

Market

Occupancy YTD Q1

2013

Occupancy YTD Q1

2012 % change

Average daily rate YTD Q1

2013

Average daily rate YTD Q1

2012 % change

Revenue per available room YTD Q1 2013

Revenue per available room YTD Q1 2012 % change

Supply % change

Demand % change

Atlanta 62% 61% 2.5% $87 $86 1.2% $54 $52 3.7% 0.1% 2.5%

Boston 60% 59% 2.5% $137 $134 2.7% $83 $79 5.3% 1.1% 3.6%

Chicago 54% 55% -0.4% $107 $104 2.8% $58 $57 2.5% 0.8% 0.5%

Dallas 64% 59% 7.1% $92 $89 3.9% $59 $53 11.3% 0.4% 7.6%

Denver 61% 59% 3.4% $96 $94 1.4% $59 $56 4.9% 1.5% 5.0%

Houston 70% 66% 6.0% $101 $95 6.2% $71 $63 12.6% 0.6% 6.7%

Los Angeles 74% 72% 2.4% $133 $128 4.3% $98 $92 6.7% -0.1% 2.2%

Miami 86% 83% 4.0% $224 $199 12.2% $192 $165 16.7% 0.7% 4.7%

New York 78% 73% 6.8% $211 $199 5.8% $165 $146 12.9% 2.4% 9.4%

Orlando 77% 74% 3.4% $111 $106 5.0% $85 $79 8.6% 1.8% 5.2%

Philadelphia 58% 59% -1.5% $114 $113 1.1% $66 $67 -0.5% 3.4% 1.7%

Phoenix 72% 72% 0.8% $133 $128 3.8% $96 $92 4.7% 0.4% 1.2%

San Diego 68% 67% 0.3% $127 $126 0.9% $86 $84 1.3% 0.5% 0.8%

San Francisco 74% 72% 2.2% $166 $160 3.6% $122 $115 5.8% 0.2% 2.4%

Washington, DC 60% 60% 0.8% $148 $143 3.7% $89 $85 4.6% 0.4% 1.3%

United States 58% 57% 1.8% $108 $104 4.5% $62 $59 6.4% 0.7% 2.6%

Source: Smith Travel Research


Sentiment gauge Multifamily

Market Demand Rents Sales volume Construction deliveries

Atlanta Up Up Down Up

Austin Up Up Down Down

Baltimore Down Up Down Down

Boston Down Down Neutral Down

Charlotte Up Up Up Up

Chicago Up Up Down Down

Dallas - Fort Worth Up Up Up Down

Houston Up Up Down Up

Inland Empire Up Up Down Up

Jacksonville Up Up Up Up

Las Vegas Up Up Down Neutral

Los Angeles Up Up Down Up

Memphis Up Up Up Down

Nashville Up Up Up Down

New York Up Up Down Up

Northern New Jersey Up Up Up Neutral

Orange County Up Up Up Up

Orlando Up Up Down Down

Philadelphia Up Up Down Down

Phoenix Up Up Up Up

Portland Up Up Down Up

Raleigh Up Up Down Up

Richmond Up Down Up Up

San Diego Up Up Up Down

San Francisco Up Up Up Up

San Jose Up Up Up Up

Seattle Down Up Down Up

South Florida Up Up Down Up

Tampa Up Up Down Down

Washington - NoVA - MD Up Up Up Up

United States totals (number of markets)

Down (Q-O-Q) 3 2 15 11

Neutral (Q-O-Q) 0 28 1 2

Up (Q-O-Q) 27 0 13 17

Total (Q-O-Q) 30 30 30 30

United States totals (% of markets)

Down (Q-O-Q) 10.0% 6.7% 53.3% 36.7%

Neutral (Q-O-Q) 0.0% 93.3% 3.3% 6.7%

Up (Q-O-Q) 90.0% 0.0% 43.3% 56.7%

Total (Q-O-Q) 100.0% 100.0% 100.0% 100.0%


Sentiment gauge Office

Market Tour velocity Leasing volume Rents Concessions Sales volume Construction deliveries Construction starts

Atlanta Up Up Up Down Up Neutral NeutralAustin Neutral Down Up Down Up Neutral NeutralBaltimore Neutral Neutral Neutral Neutral Down Neutral UpBoston Neutral Neutral Up Neutral Down Neutral NeutralCharlotte Up Neutral Up Neutral Neutral Up UpChicago CBD Up Up Neutral Neutral Up Neutral UpChicago Suburbs Neutral Up Neutral Neutral Neutral Neutral NeutralCincinnati Neutral Up Neutral Neutral Up Down UpCleveland Neutral Down Neutral Neutral Up Up NeutralColumbus Neutral Up Neutral Neutral Neutral Down UpDallas Up Up Up Neutral Up Down UpDenver Neutral Neutral Up Neutral Down Down UpDetroit Neutral Up Neutral Neutral Up Neutral UpFairfield County Neutral Down Neutral Neutral Down Neutral NeutralFort Lauderdale Neutral Down Neutral Neutral Down Neutral NeutralHampton Roads Neutral Down Neutral Neutral Down Neutral UpHouston Up Up Up Neutral Up Neutral UpIndianapolis Up Up Neutral Down Neutral Neutral NeutralJacksonville Neutral Neutral Neutral Neutral Up Neutral NeutralLos Angeles Up Neutral Neutral Neutral Up Neutral NeutralMiami Neutral Down Up Neutral Up Up NeutralMilwaukee Neutral Up Neutral Neutral Up Neutral NeutralMinneapolis Up Neutral Up Down Up Neutral NeutralNew Jersey Neutral Down Neutral Neutral Down Neutral UpNew York Up Neutral Neutral Up Neutral Neutral NeutralNorthern Virginia Neutral Neutral Neutral Neutral Down Neutral DownOakland-East Bay Up Up Up Neutral Neutral Neutral NeutralOrange County Down Down Neutral Neutral Down Neutral NeutralOrlando Neutral Down Neutral Neutral Neutral Neutral NeutralPhiladelphia Neutral Up Up Neutral Down Up UpPhoenix Up Down Neutral Neutral Down Down NeutralPittsburgh Neutral Neutral Up Down Down Neutral NeutralPortland Up Up Up Neutral Up Neutral UpRaleigh-Durham Up Neutral Neutral Neutral Neutral Neutral NeutralRichmond Up Up Up Down Down Up NeutralSacramento Up Neutral Neutral Neutral Down Neutral NeutralSan Antonio Up Up Up Neutral Neutral Neutral NeutralSan Diego Neutral Down Up Neutral Down Neutral NeutralSan Francisco Up Down Up Down Up Neutral UpSan Francisco Peninsula Up Up Up Down Down Up UpSeattle Neutral Up Up Down Up Neutral UpSilicon Valley Up Up Up Down Up Up UpSt. Louis Up Up Neutral Neutral Down Neutral NeutralSuburban Maryland Neutral Down Neutral Up Neutral Up DownTampa Up Up Up Down Up Neutral NeutralWashington, DC Neutral Neutral Neutral Neutral Down Down DownWest Palm Beach Neutral Down Neutral Neutral Down Neutral NeutralWestchester County Neutral Down Neutral Neutral Down Neutral Neutral

United States totals (number of markets)Down (Q-O-Q) 1 15 0 11 20 6 3Neutral (Q-O-Q) 26 13 27 35 10 34 28Up (Q-O-Q) 21 20 21 2 18 8 17Total (Q-O-Q) 48 48 48 48 48 48 48

United States totals (% of markets)Down (Q-O-Q) 2.1% 31.3% 0.0% 22.9% 41.7% 12.5% 6.3%Neutral (Q-O-Q) 54.2% 27.1% 56.3% 72.9% 20.8% 70.8% 58.3%Up (Q-O-Q) 43.8% 41.7% 43.8% 4.2% 37.5% 16.7% 35.4%Total (Q-O-Q) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%


Sentiment gauge Industrial

Market Rents Sales volume Absorption Under construction Deliveries

Atlanta Down Down Up Up DownAustin Down Up Down Neutral DownBaltimore Neutral Up Neutral Down UpBoston Neutral Up Up Neutral DownBroward County Up Down Up Down UpCentral New Jersey Up Down Neutral Up UpCentral Valley (California) Up Up Down Up NeutralCharlotte Up Down Neutral Down DownChicago Neutral Down Neutral Up UpCincinnati / Dayton Up Up Up Down NeutralCleveland Neutral Down Neutral Down NeutralColumbus Neutral Down Neutral Up DownDallas / Fort Worth Down Down Down Up UpDenver Up Down Neutral Up UpDetroit Up Up Up Down NeutralGreensboro Down Neutral Neutral Up DownHampton Roads Up Up Down Down NeutralHouston Up Neutral Neutral Down UpIndianapolis Up Down Up Up UpInland Empire Up Neutral Up Up UpJacksonville Up Up Neutral Neutral NeutralKansas City Down Up Up Down DownLos Angeles Up Down Neutral Up UpMemphis Up Up Up Up DownMiami-Dade Up Down Down Down UpMinneapolis / St. Paul Up Down Neutral Up NeutralNashville Down Down Neutral Down NeutralNorthern New Jersey Up Down Down Up DownNYC Up UP Up Down NeutralOakland / East Bay Up Neutral Up Up NeutralOrange County (California) Up Up Neutral Up NeutralOrlando Up Down Neutral Down DownPalm Beach Neutral Down Down Neutral NeutralPhiladelphia / Harrisburg Neutral Up Neutral Down NeutralPhoenix Up Up Up Up DownPittsburgh Down Up Neutral Down DownPortland Neutral Down Down Down DownRichmond Down Up Up Down UpSacramento Up Up Neutral Down UpSan Antonio Up Up Neutral Up DownSan Diego Up Down Neutral Down NeutralSan Francisco Up Down Down Neutral NeutralSeattle Up Up Neutral Up UpSilicon Valley / South Bay Up Up Up Neutral NeutralSt. Louis Neutral Up Neutral Up NeutralTampa Bay Up Down Neutral Down NeutralWashington DC Neutral Down Down Down Up

United States totals (number of markets)Down (Q-O-Q) 8 21 10 21 14Neutral (Q-O-Q) 10 4 23 6 18Up (Q-O-Q) 29 22 14 20 15Total (Q-O-Q) 47 47 47 47 47

United States totals (% of markets)Down (Q-O-Q) 17.0% 44.7% 21.3% 44.7% 29.8%Neutral (Q-O-Q) 21.3% 8.5% 48.9% 12.8% 38.3%Up (Q-O-Q) 61.7% 46.8% 29.8% 42.6% 31.9%Total (Q-O-Q) 100.0% 100.0% 100.0% 100.0% 100.0%


Sentiment gauge Retail

Market Leasing volume Rents Sales volume Construction deliveries Construction starts

Atlanta Down Up Down Up UpAustin Down Down Down Down DownBaltimore Down Up Down Down UpBoston Up Up Up Down DownCharlotte Down Down Down Down DownChicago Up Up Down Up UpCincinnati Up Up Down Down DownCleveland Up Down Down Down DownDallas Down Up Down Down UpDenver Up Up Down Down DownDetroit Up Down Neutral Down UpFairfield County Down Up Neutral Down UpFort Lauderdale Up Up Up Up UpHampton Roads Down Up Neutral Up DownHouston Down Up Up Down DownIndianapolis Down Up Down Down UpJacksonville Down Down Down Up UpLos Angeles Down Up Up Down DownMiami (Miami-Dade County) Down Down Down Down UpMinneapolis Down Down Down Down UpNorthern New Jersey Up Up Down Down UpNew York Down Up Down Up DownOrange County Down Down Down Down DownOrlando Down Down Down Down DownPhiladelphia Up Up Down Down UpPhoenix Down Down Down Down DownPittsburgh Down Down Up Down DownPortland Down Up Down Down UpRaleigh-Durham Up Up Down Up DownRichmond Down Up Down Down DownSacramento Down Down Down Down UpSan Antonio Down Down Down Down UpSan Diego Down Up Up Down DownSan Francisco Up Up Down Up NeutralSeattle Down Down Down Down DownSt. Louis Down Down Down Down DownTampa Down Up Down Down DownWashington, DC Down Up Down Down DownWestchester County Down Up Neutral Down UpWest Palm Beach Up Up Down Up UpSan Diego Up Down Neutral Down NeutralSan Francisco Up Down Down Neutral NeutralSeattle Up Up Neutral Up UpSilicon Valley / South Bay Up Up Up Neutral NeutralSt. Louis Neutral Up Neutral Up NeutralTampa Bay Up Down Neutral Down NeutralWashington DC Neutral Down Down Down Up

United States totals (number of markets)Down (Q-O-Q) 28 15 31 31 21Neutral (Q-O-Q) 0 0 3 0 1Up (Q-O-Q) 12 25 6 9 18Total (Q-O-Q) 40 40 40 40 40

United States totals (% of markets)Down (Q-O-Q) 70.0% 37.5% 77.5% 77.5% 52.5%Neutral (Q-O-Q) 0.0% 0.0% 7.5% 0.0% 2.5%Up (Q-O-Q) 30.0% 62.5% 15.0% 22.5% 45.0%Total (Q-O-Q) 100.0% 100.0% 100.0% 100.0% 100.0%


Sentiment gauge Hotel

Market Investor sentiment Supply Hotel transaction volume Hotel revenue per available room

Atlanta Up Neutral Up UpBoston Up Neutral Up UpChicago Up Up Neutral UpDallas Up Neutral Up UpDenver Up Neutral Neutral UpHouston Up Up Up UpLos Angeles Up Up Up UpMiami Up Neutral Up UpNew York Down Up Neutral UpOrlando Up Neutral Neutral UpPhiladelphia Up Neutral Up UpPhoenix Down Neutral Up UpSan Diego Up Neutral Neutral UpSan Francisco Up Neutral Neutral UpWashington, DC Down Up Down Up

United States totals (number of markets)Down (Q-O-Q) 3 0 1 0Neutral (Q-O-Q) 0 10 6 0Up (Q-O-Q) 12 5 8 15Total (Q-O-Q) 15 15 15 15

United States totals (% of markets)Down (Q-O-Q) 20.0% 0.0% 6.7% 0.0%Neutral (Q-O-Q) 0.0% 66.7% 40.0% 0.0%Up (Q-O-Q) 80.0% 33.3% 53.3% 100.0%Total (Q-O-Q) 100.0% 100.0% 100.0% 100.0%


Key transactions Multifamily

Property name City State Units Sale date Price $ p.s.f. Price per unit

Cap Rate (%)

Buyer Seller

Archstone/EQR AVB Portolio Various 21,781 2/27/2013 $15,650,000,000 N/A N/A N/A Equity Residential & AvalonBay Communities

Lehman Brothers Holdings, Inc.

Milestone Apartment REIT Portolio Various 16,943 3/6/2013 $1,200,000,000 $86.95 $70,826 6 Milestone Apartments

REITInvesco Realty Advisers, Inc.

EQR to Greystar/Gold-man Sachs Portolio Various 5,100 3/21/2013 $942,200,000 $205.58 $184,745 5.5 Greystar Real Estate

Partners Equity Residential

Wereldhave Sale to Lone Star Funds Portolio Various N/A 3/20/2013 $621,500,000 N/A N/A N/A Lone Star Funds Wereldhave USA-CA

LLCEquity Residential to Goldman/Greystar Portolio Various 2,910 2/12/2013 $557,800,000 $188.38 $191,684 5.5 Greystar Real Estate

Partners Equity Residential

Crystal Towers Arlington VA 912 3/28/2013 $322,250,000 $353.34 $353,344 N/A Dweck Properties Equity Residential

Crystal House Arlington VA 828 3/21/2013 $262,500,000 $298.30 $317,029 N/A Mack-Cali Realty Corporation

AvalonBay Communities, Inc.

EQR/Starwood & Bainbridge Orlando FL 2,294 2/26/2013 $254,000,000 $111.54 $110,724 6 Starwood Capital Group Equity Residential

Mercedes House New York NY 862 2/6/2013 $170,000,000 N/A $197,216 N/A Invesco Ltd. Two Trees Management Co. LLC

Babcock & Brown/Variant N/A N/A 3,709 2/28/2013 $142,000,000 $46.48 $38,285 N/A Variant Commercial Real Estate Babcock & Brown

Decoverly Rockville MD 564 3/21/2013 $135,000,000 $366.12 $239,362 N/A Stellar Advisors, LLC AvalonBay Communities, Inc.

Monument Park Fairfax VA 460 1/25/2013 $124,000,000 $258.69 $269,565 N/A Crow Holdings Archstone

Equity Residential to Cortland Partners N/A GA 1,026 3/28/2013 $117,335,000 $103.03 $114,362 6.4 Cortland Partners Equity Residential

Summer House Apart-ments Alameda CA 615 4/16/2013 $117,000,000 $209.49 $190,244 N/A N/A Kennedy Wilson, Inc.

Chesapeake Glen Glen Burnie MD 796 2/26/2013 $103,125,000 $146.19 $129,554 5.9 Morgan Properties Equity Residential

SOMA at 788 San Francisco CA 160 1/11/2013 $103,000,000 $645.35 $643,750 N/A LaSalle Investment

Management, Inc.AvalonBay Communities, Inc.

MSU Student Housing Portfolio N/A MI 846 2/4/2013 $101,700,000 $81.22 $120,213 N/A The Woodlark Com-

paniesThe Pierce Company, Inc.

TGM Willowbrook Willow-brook IL 712 2/14/2013 $101,000,000 $138.67 $141,854 5.9 TGM Associates L.P. RREEF America

MSU Student Housing Portfolio MI 846 2/4/2013 $101,700,000 $81.22 $302,679 N/A The Woodlark

CompaniesThe Pierce Company, Inc.

TGM Willowbrook Willow-brook IL 712 2/14/2013 $101,000,000 $138.67 $141,854 5.9 TGM Associates L.P. RREEF America

Archstone Crystal Towers $322M in April of 2013Jones Lang LaSalle facilitated Equity Resi-dential’s sale of two buildings, consisting of 912 units, located in Arlington, VA. Dweck Properties was the buyer.

EQR Orlando Portfolio $254M in March of 2013Jones Lang LaSalle facilitated Equity Residential’s sale of a 2,294-unit portfolio located in Orlando, FL. Starwood Capital was the buyer.

Canyon RidgeApril of 2013Jones Lang LaSalle facilitated Landmark Trust of America’s sale of 350 units located in Atlanta, GA. GrayCo was the buyer.

Top Jones Lang LaSalle Multifamily sales - YTD 2013


Key transactions Office

Williams Tower Houston office property in March of 2013Jones Lang LaSalle facilitated Hines REIT’s sale of a 1,479,764-square-foot Class A trophy office building located in Houston, Texas. Invesco was the buyer.

350 Madison Avenue $261.5M in March of 2013Jones Lang LaSalle sold the Class A 394,000-square-foot office property in Manhattan for Kensico Properties for $664 p.s.f. to RFR Holding. The building traded at a 2.6 percent cap rate.

Burnham Center $95M in February of 2013Jones Lang LaSalle sold the 579,848-square-foot, historic, Class B office property in Chicago for Harbor Group International for $163 p.s.f. to The Shidler Group. The building traded at a 6.5 percent cap rate.

Top Jones Lang LaSalle Office sales - YTD 2013


Key transactions Industrial

Core Midwest Distribution Portfolio $99.5M in Q1 2013Jones Lang LaSalle sold on behalf of KTR Capital Partners the five-building, 2.7 million-square-foot industrial portfolio, located across Chicago, Indianapolis, Cincinnati, Columbus and Walton, KY, to Welsh Property Trust.

GE Aviation Facility $35M in Q4 2012Jones Lang LaSalle facilitated Scannell’s sale of a 314,845-square-foot build-to-suit manufacturing facility located in Auburn, AL. American Realty Capital was the buyer.

Pepsi Bottling Ventures $26M in Q3 2012Jones Lang LaSalle facilitated Johnson Development’s sale of a 526,320-square-foot industrial property, located in Winston-Salem, NC. Tratt Properties was the buyer.

Top Jones Lang LaSalle Industrial sales – 2H 2012 – YTD 2013

Date Property Name City State Sales Price $ p.s.f. Cap rate Buyer Seller

11-Feb-13 Barnes & Nobles Distribution Center

Monroe Town-ship NJ $83,000,000 $72 7.20% CalPERS CBRE Global Investors

5-Mar-13 Centergate Distribu-tion Park

San Ber-nardino CA $67,000,000 $65 N/A Bentall Kennedy KTR Capital Partners

29-Jan-13 3100 112th Street Southwest Everett WA $48,735,000 $127 N/A Boeing Company Aviation Technical Services

25-Feb-13 301 Blair Rd Avenel NJ $48,000,000 $58 N/A KTR Capital Partners C&S Wholesale Grocers

13-Feb-13 Westport Distribu-tion I & II Salt Lake City UT $47,500,000 $63 N/A Industrial Income Trust Buzz Oates Real Estate

28-Feb-13 4244 N Perris Boulevard Perris CA $40,000,000 $57 N/A Ross Stores TA Realty

1-Feb-13 Newell Rubbermaid Tallmadge OH $34,900,000 $43 N/A American Realty Capital Trust IV (ARCT IV) InSite Real Estate

11-Jan-13 Fedex Ground South Windsor CT $32,200,000 $144 6.50% FEM Sullivan Road LLC Suncap Development Group

15-Mar-13 Fontana Logistics Center Fontana CA $29,600,000 $71 N/A Coaster Company of America Overton Moore Properties

28-Feb-13 Attends Healthcare Products Greenville NC $28,200,000 $34 N/A Attends Healthcare Products Inc Avgeris & Assoc Inc

14-Mar-13 717-737 South Desplaines Street Chicago IL $27,000,000 $118 N/A Ascent Corp Sterling Bay Cos

4-Jan-13 Utilimaster Wakarusa IN $25,000,000 $49 N/A Berkshire Hathaway Inc Utilimaster Corporation

12-Mar-13 Hacks Cross Logistics Center Olive Branch MS $24,650,000 $41 N/A Gramercy Capital Corp Hillwood

7-Feb-13 Future MiTac Newark CA $22,114,000 $93 N/A MiTac International Corp CapRock Partners

18-Jan-13 Liberty Point Corpo-rate Center Libertyville IL $21,800,000 $61 N/A Silverman Group MetLife

8-Feb-13 Cobia Distribution Center Miami FL $20,600,000 $86 7.00% TIAA-CREF ProLogis

2-Jan-13 Medline Industries Dallas TX $20,000,000 $69 N/A Exeter Property Group Alex Liberman

3-Jan-13 1990 Lake Pointe Lewisville TX $20,000,000 $50 N/A Exeter Property Group Ardinger Properties LLC

15-Mar-13 Turnpike Distribu-tion Center New Galilee PA $20,000,000 $49 N/A Centurion Investments LLC Al Neyer Inc

28-Jan-13 165 Cambridge Park Dr Cambridge MA $19,520,000 $258 N/A Hines George B Dodge Jr Trustee


Key transactions Retail

Date Property name City State Sales price($M) $ p.s.f. Cap

rate Buyer Seller

Mar-13 fmr Pathmark New York NY 150.0 $3,445 N/A Extell Development JV Starwood CG Park-It Management

Mar-13 Legends Outlet Kansas City KS 131.5 $200 N/A KKR JV RED Legacy Morgan Stanley

Mar-13 Downton Pleasant Hill Pleasant Hill CA 100.0 $289 5.5% UBS Realty Advisors Loja Group LLX

Mar-13 Peninsula Shopping Center Palos Verdes Peninsula CA 87.3 $297 5.3% UBS JV Vestar Development Principal Real Estate Investors

Mar-13 664 North Michigan Ave Chicago IL 86.6 $4,774 N/A Acadia Realty Trust Terra Foundation for American Art

Mar-13 Louisiana Boardwalk Bossier City LA 67.6 $121 N/A Garrison Investment Group C-III Asset Management

Apr-13 Garden City Square Retail Garden City NY 65.0 $377 N/A Hampshire CosMetropolitan Ralty Associates JV Angelo Gordon

Mar-13 Marketplace of Delray Delray Beach FL 65.0 $234 7.4% Ramco-Gershenson Properties Clarion Partners

Mar-13 Mission Bay Plaza Boca Raton FL 61.6 $234 7.4% Ramco-Gershenson Properties Clarion Partners

Mar-13 Canton Marketplace Canton GA 61.1 $182 8.7% Cole Corp Income Trust GLL RE Partners

Mar-13 MacArthur Park Irving TX 50.6 $255 N/A Goldman Sachs AmREIT

Mar-13 Courtyard at the Commons Calabasas CA 50.0 $561 6.0% RREEF America CBRE Global Investors

Miracle Marketplace $92M in January of 2013Jones Lang LaSalle facilitated AWE Talis-man’s sale of the almost 250,000-square-foot property, located in Miami, FL.

Colonie Center April of 2013Jones Lang LaSalle facilitated Heitman’s sale of a 1.3 million-square foot property located in Albany, NY. KKR & Co, L.P. was the buyer.

Bethesda Walk March of 2013Jones Lang LaSalle facilitated DLC Manage-ment Corporation’s sale of the 68,000-square-foot property located in Atlanta, GA.

Top Jones Lang LaSalle Retail sales - YTD 2013


Key transactions Hotel

Property name Location Closing date Price Rooms Price per key ($)

Atlanta Marriott Marquis Atlanta, GA 13-Jan Undisclosed 1663 Undisclosed

Bacara Resort and Spa Goleta, CA 13-Feb $184,900,000 354 $522,300

Flatotel New York, NY 13-Feb $180,000,000 288 $625,000

Loews Madison Hotel Washington, DC 13-Feb $140,000,000 356 $393,300

Alex Hotel New York, NY 13-Feb $115,000,000 203 $566,500

Embassy Suites San Diego San Diego, CA 13-Jan $112,500,000 337 $333,800

The Back Bay Hotel Boston, MA 13-Feb Undisclosed 225 Undisclosed

The James Hotel SoHo New York, NY 13-Mar $85,000,000 114 $745,600

Driskill Hotel Austin, TX 13-Mar $84,500,000 189 $447,100

Hyatt Place Midtown New York, NY 13-Mar $76,200,000 185 $411,900

Omni Providence Providence, RI 13-Jan $65,000,000 564 $115,200 Holiday Inn Express Hotel & Suites Fishermans Wharf San Francisco, CA 13-Feb $60,500,000 252 $240,100

InterContinental Hotel New Orleans, LA 13-Jan Undisclosed 479 Undisclosed

Andaz San Diego San Diego, CA 13-Mar $53,000,000 159 $333,300

Miami Beach Resort & Spa $117M ($276,000 per key) in March 2013On behalf of Blackstone, Jones Lang La-Salle’s Hotels & Hospitality Group closed the sale of the Miami Beach Resort and Spa in March 2013. MBR Waterview LLC purchased the 18-story, 424-room property for $117 million. The new ownership group plans to enhance the hotel which will include a new design concept for the public areas, restora-tion of meeting facilities, renovated guest rooms, and new food and beverage concepts.

Marriott Marquis Atlanta $293M ($176,000 per key), January 2013 On behalf of Host Hotels & Resorts, Jones Lang LaSalle’s Hotels & Hospitality Group closed the sale of the Marriott Marquis Atlanta in January 2013. The 1,663-room hotel transacted for $293 million, marking the city’s largest transaction on record. The hotel was acquired by an undisclosed buyer.

Driskill Hotel Austin $85M ($450,000 per key) in March of 2013In March 2013, an affiliate of Hyatt Hotels Corporation acquired the 189-room Driskill Hotel for approximately $85 million from an investment fund managed by Lowe Enterprises Investors, which was represented in the transaction by Jones Lang LaSalle’s Hotels & Hospitality Group.

Top Jones Lang LaSalle Hotel sales - YTD 2013


Capital market trends and fundamentals at a glance

The surge in CMBS issuance continues in 2013 with anticipated 60 percent year-over-year growth for the full year. We can expect the pace of growth in new CMBS issuance to slow markedly in 2014 and 2015 to a more sustainable level, as banks - including for the first time some smaller-to-medium size regional players - begin to substantially increase their market share aligned with rising interest rates at that time.

Investment sales growth continues at a pace of 15 to 20 percent over the 2013 forecast period, which could reach 25 percent for 2014. A combination of factors during this period include still low interest rates, stronger U.S. economic expansion, periodic global upheaval which should help maintain U.S. appeal as a safe haven, generally increasing

The U.S. continues to be viewed as the “safe haven” for real estate investment, given the potential for overall greater returns and protection in relation to alternative investment classes. Investor flight to ‘‘safer’’ properties remains evident throughout the slow market recovery. We provide a snapshot here of strengthening fundamentals and higher yields across core property types for 2013 and beyond, as well as the key factors in the capital markets that support such investment activity.

Capital markets

We expect the 10-year treasury yield to finally begin to turn upward late in the year reaching close to 2.4 percent by the end of 2013.

We expect cap rates for higher quality property to stay on average nationally fairly flat over the next 18-24 months, with modest net downward pressure over the first half of that time frame, and slightly net upward pressure over the second half. In the second half of 2015, we expect cap rates to begin to see some sustained gradual upward movement, as spread narrowing of the previous two years prompts investors to begin to demand modestly higher yields in light of anticipated rising interest rates above the current near-0 percent policy.

CMBS Issuance Peaked in 2007 at $230 Billion1990 – 2013

US $

billio

ns

New post-recession high of $48 billion in new issuance for 2012; up over 48.0 percent annually; more viable financing option and already on a surge for 2013

New CMBS issuance of $31.0 billion YTD through April is over 3x higher than the $9.3 billion for same period in 2012

$3 $8 $14 $17 $18 $16 $26

$37

$74 $57

$47

$67 $52

$78 $93

$167

$198

$229

$12 $3

$12

$33 $48

$31

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

$240

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

YTD*

U.S. cap rates, GDP growth and 5 & 10-year treasury comparisonQ1 2001 – Q1 2013*

Attractive interest rate environment is evident in the property yields and economic growth differential

-6.0%-5.0%-4.0%-3.0%-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

2001

Q120

01Q2

2001

Q320

01Q4

2002

Q120

02Q2

2002

Q320

02Q4

2003

Q120

03Q2

2003

Q320

03Q4

2004

Q120

04Q2

2004

Q320

04Q4

2005

Q120

05Q2

2005

Q320

05Q4

2006

Q120

06Q2

2006

Q320

06Q4

2007

Q120

07Q2

2007

Q320

07Q4

2008

Q120

08Q2

2008

Q320

08Q4

2009

Q120

09Q2

2009

Q320

09Q4

2010

Q120

10Q2

2010

Q320

10Q4

2011

Q120

11Q2

2011

Q320

11Q4

2012

Q120

12Q2

2012

Q320

12Q4

2013

Q1*

Perc

enta

ge

Apartment Industrial Office Retail GDP Growth 5yr Treas 10yr Treas

* As of April 25, 2013 Source: Moody’s Analytics, Federal Reserve, Commercial Mortgage Alert, Jones Lang LaSalle Research

Source: Jones Lang LaSalle Research, Real Capital Analytics, Bloomberg *Preliminary data as of early April 2013; GDP annual growth as of Apr 2013 for Q1 2013

U.S. sales transaction volume growth slowed from 60 percent+ in 2011 to just under 30 percent for 2012

Q1 2001 – Q1 2013*

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Total

trans

actio

n volu

me ($

billio

ns)

Apartment Industrial Office Retail

*U.S. total transaction volume by product type – apartment, industrial, office and retail Projected combined full-year

2013 volume growth:

64%

~30% 15-20%

Properties of at Least $5 Million, portfolio, including entity-level transactions are included in these data *Projections as of early Apr 2013Source: Jones Lang LaSalle Research, Real Capital Analytics


Expect pace of growth to remain healthy into 2014.

We expect annual increases of 25 and 34 percent for levels of housing starts for 2013 and 2014, respectively. A very affordable pricing environment and more ‘‘normalized’’ mortgage lending standards support room for continued more then 10 percent increases for a couple years post-forecast period.

We see a further acceleration in housing prices in 2014, given the development of a shift from the propensity to rent to buy, as interest rates remain very attractive and lending standards loosen somewhat.

institutional investor allocation to ‘‘real’’ assets, and a continued broad search for higher-yielding investments.

Key property fundamentals at a glance Multifamily:

Expect apartment vacancy to remain below 10-year average and stable into 2014.

U.S. apartment vacancy continues below the 10-year average

0%

2%

4%

6%

8%

10%

12%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

YE 20

13

YE 20

14

6.1%

forecast

Multifamily rent growth continues across the nation

Quarterly percent change in marketed rents

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

2013

*

2014

*

forecast

Single family housing starts expected to gain steam over the next 24 months

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

*201

3

*201

4

Sing

le Fa

mily

Star

ts (th

ousa

nds)

Housing prices continue to gain momentum into 2014

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

2014

*

Annu

al %

Cha

nge

Source: Jones Lang LaSalle Research, Moody’s Analytics, FHFA purchase index (SA)

Source: Jones Lang LaSalle Research, Moody’s Analytics, U.S. Census Bureau

*average quarterly growth rate for forecast years

Source: Jones Lang LaSalle Research, PPR, Costar


Industrial:

Expect vacancy in newer properties, driven partly by mid-size tenants, to outpace that of older set.

Expect premium in asking rents for newer properties to widen significantly.

Office:

Projected stronger job growth and little new near-term supply flows through fundamentals, causing overall vacancy to fall at a steady and moderate pace for 2013-2014. Beyond that, we believe somewhat higher supply by 2015 will begin to cut into occupancy rate gains.

Tightening markets, particularly primary and some secondary CBDs, as well as energy/tech markets, are expected to drive similar growth in 2013 as in 2012. We expect further acceleration in 2014 and into 2015, as rent growth broadens geographically and to a lesser extent by class. For a market such as Manhattan, however, we expect rents to reaccelerate.

Office rents are down +/- 10.0 percent from prior peaks, but experienced their 9th straight quarter of increases in Q1Quarterly percent change in marketed rents

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

2013

*

2014

*

forecast

Despite continued occupancy gains, U.S. office vacancy remains stubbornly elevated at 17.0 percent

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

YE 20

13

YE 20

14

17.0% forecast

Accelerating occupancy gains push U.S. industrial vacancy to lowest level since 2009

0%

2%

4%

6%

8%

10%

12%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

YE 20

13

YE 20

14

8.4% forecast

Industrial rents are tracking upwards and now stand at 3.1 percent over the first quarter last yearQuarterly percent change in marketed rents

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

2013

*

2014

*

forecast




Hotels:

Rise in demand levels associated with improving economy expected to boost occupancy.

Recovery in demand and low new supply pipeline are key to growth in hotel ADRs.

Retail:

Expect landlords to focus on backfilling vacant space.

Population growth to partly drive retail sales and rental rate increases.

U.S. hotel occupancy levels mark 11 consecutive quarters of increases and approaching long-term average

50%

52%

54%

56%

58%

60%

62%

64%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

YE 20

13

YE 20

14

61.9%

forecast

U.S. hotel occupancy (12-mo. moving average)

Growth in hotel average daily rates (ADRs) accelerating due to recovery in demand and low new supply pipelineChange in 12-mo. moving average ADR

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

2013

2014

forecast

Retail rents have finally bottomed and are heading upwardQuarterly percent change in marketed rents

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

2013

*

2014

*

forecast

U.S. retail vacancy has declined only 70 basis points in the last three years

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

Q2 20

11

Q3 20

11

Q4 20

11

Q1 20

12

Q2 20

12

Q3 20

12

Q4 20

12

Q1 20

13

YE 20

13

YE 20

14

6.8%

forecast

Source: Smith Travel Research, Jones Lang LaSalle Research

Source: Smith Travel Research, Jones Lang LaSalle Research



Although some clarity has formed so far in 2013, transition remains underway that supports steady

growth in overall real estate investment activity across the various property sectors. While the outlook is promising, it is important to look for

any deviating signals. The key for the successful investor is to stay ahead of shifts, and be aware of any economic or fiscal signals that may point to a

change in course, which could impact any of the growth factors driving fundamentals.

www.us.am.joneslanglasalle.com/research

For further information please contact:

Benjamin Breslau Director - Americas research [email protected] tel +1 617 531 4233

Marisha Clinton Director - Capital markets research [email protected] tel +1 212 812 6488

Josh Gelormini Director - Economy research [email protected] tel +1 312 228 2060

Brady Titcomb Manager - Multifamily research [email protected] tel +1 954 653 3222

John Sikaitis Director - Office research [email protected] tel +1 202 719 5839

Aaron Ahlburn Director - Industrial research [email protected] tel +1 310 9408026

Dain Fedora Manager - Industrial research [email protected] tel +1 213 239 6262

Keisha McDonnough Analyst - Retail research Keisha [email protected] tel +1 954 990 0844

Lauro Ferroni Vice President - Hotel research [email protected] tel +1 312 228 2566

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About Jones Lang LaSalle

About Jones Lang LaSalle Research

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